Europe's trade chief gave warning of “a spiral of protectionism” in the grain trade as the price of rice soared to a new record and grain-producing countries stopped exports to prevent further outbreaks of food rioting.

Leading grain exporters in the developing world are shutting off supplies in an attempt to curb domestic food price inflation, but Peter Mandelson, the European Trade Commissioner, said that the export curbs were aggravating food shortages.

He said: “By chasing an illusion of food security these policies throttle domestic production, choke off supplies and risk leading to a spiral of protectionism and dwindling production.”

His criticism came as Indonesia joined India, Egypt and Vietnam in curbing exports of rice. Kazakhstan, a leading grain producer, said this week that it would suspend wheat exports until September, joining Argentina, Russia and Ukraine, which have already announced curbs on grain exports.

The mounting panic over rice shortages has sent the futures price on the Chicago Board of Trade soaring 10 per cent in a week. That has exacerbated problems for Asian rice importers such as the Philippines, which yesterday failed to secure sufficient bids to fulfil a tender for 500,000 tonnes of rice despite a 25 per cent increase in the price over last month.

A tender by Bangladesh calling for 25,000 tonnes of rice closed on Wednesday without a single bid.

Hoarding is the main cause of the rice crisis, according to the International Rice Research Institute (IRRI). “It's an understandable reaction by governments but it is not necessary. Southeast Asia is entering a harvest period,” said an IRRI spokesman.

In the longer term the Manila institute sees severe problems with rice supply in Asia. “In the past three to four years, Asia is eating more rice than it produces. World stocks have come down substantially,” said IRRI. The main causes are shrinking cropland, dwindling water supplies, inadequate investment in agriculture and a shortage of labour, all consequences of Asia's rapid industrialisation.

New varieties of rice, hybrids and bio-engineered strains could improve output but funds for research and development have been cut.

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